Financial problems do not always have to lead to the company’s bankruptcy. If the business has difficulty paying its obligations but there are real grounds for continuing operations, the solution may be restructuring of the business.

Its purpose is above all to avoid bankruptcy, put the debt in order and work out repayment terms that allow the company to regain financial stability and continue operating.

Our firm supports entrepreneurs and companies in matters concerning restructuring proceedings, from analysing the company’s situation and choosing the right solution, through preparing proposals for creditors, to conducting the proceedings and performing the arrangement concluded.

How we can help

As part of our restructuring assistance, our work includes, among other things:

• analysing the legal and financial situation of the business,
• assessing whether restructuring is possible,
• choosing the right type of proceedings,
• analysing the debt and the structure of creditors,
• preparing arrangement proposals,
• negotiations with creditors,
• preparing the documentation needed to open the proceedings,
• representing the entrepreneur in court,
• support in dealing with the supervisor or administrator,
• advice during the performance of the arrangement.

We start every case by establishing whether the business has a realistic chance of continuing to operate and whether restructuring will be a better solution than bankruptcy.

When is it worth considering restructuring?

Restructuring may be the right solution both for an entrepreneur who is already insolvent and for a company that is only at risk of insolvency.

It is worth considering especially when the following arise:

• growing arrears towards counterparties,
• problems paying loan and lease instalments,
• arrears towards ZUS or the tax office,
• loss of liquidity,
• enforcement proceedings,
• loss of an important contract or a significant drop in revenue,
• problems with day-to-day financing of the business.

The earlier the entrepreneur responds to a deteriorating situation, the more options remain available.

Restructuring should therefore not be treated only as a last-resort solution.

What is an arrangement with creditors?

One of the basic elements of restructuring is concluding an arrangement with creditors.

The entrepreneur presents proposals on how the debt will be repaid, and the creditors decide whether to accept them.

Depending on the situation, the proposals may include, among other things:

• spreading the debt into instalments,
• postponing payment deadlines,
• reducing the amount of some liabilities,
• changing the repayment terms,
• converting certain claims into shares,
• other solutions that allow debt repayment to be adapted to the company’s capabilities.

The proposals should be feasible. An arrangement that does not reflect the company’s real financial capabilities from the start will not solve its problems in the long term.

Types of restructuring proceedings

The law provides several ways of conducting restructuring:

• proceedings for the approval of an arrangement,
• accelerated arrangement proceedings,
• arrangement proceedings,
• remedial proceedings.

Each of them works differently and gives the entrepreneur different options.

There is no single type of restructuring suitable for every company. The choice of proceedings should depend, among other things, on the scale of the debt, the structure of creditors, the number of disputed liabilities and the company’s actual situation.

Proceedings for the approval of an arrangement

One of the possible solutions is proceedings for the approval of an arrangement.

They allow the entrepreneur to take steps towards reaching an agreement with creditors with the participation of an arrangement supervisor and limited court involvement at the initial stage.

This may be a solution for entrepreneurs who want to put their debt in order early enough while keeping the ability to continue operating.

Before choosing this procedure, however, we analyse whether it fits the situation of the specific company and whether it gives a real chance of obtaining the creditors’ support.

Remedial proceedings

In a more complex situation, it is also possible to open remedial proceedings.

In addition to the possibility of concluding an arrangement with creditors, they allow measures to be taken to improve the economic situation of the business and restore its ability to meet its obligations.

However, remedial proceedings involve greater interference in the way the business is managed, so the decision to open them should be preceded by a thorough analysis of the company’s situation.

Restructuring and enforcement

One of the reasons entrepreneurs consider restructuring is ongoing or threatened enforcement proceedings.

Depending on the type of restructuring proceedings, the law may provide the business with protection against certain actions by creditors and against enforcement.

However, the scope of this protection is not the same in every type of proceedings.

That is why, before starting restructuring, we also analyse ongoing enforcement, creditors’ security and contracts that are key to the further operation of the business.

Restructuring and corporate insolvency

Restructuring and bankruptcy are two separate solutions.

The basic aim of restructuring is to avoid bankruptcy through an agreement with creditors and to allow the business to continue operating.

Bankruptcy proceedings, on the other hand, serve primarily to satisfy the creditors of an insolvent entrepreneur from its assets.

Restructuring may therefore be the right solution when the company is in a difficult situation but still has a viable business, sources of revenue and prospects of returning to profitability.

If continuing the business is no longer possible, it may be necessary to consider bankruptcy.

Company restructuring and management board liability

In the case of capital companies, financial problems are also significant from the point of view of the management board members’ obligations.

Merely starting talks with creditors is not always enough to protect the position of the people managing the company.

That is why we analyse in parallel the condition of the business, when any insolvency arose and the steps the management board should take.

The decision to restructure should not be put off until the company has completely lost the ability to pay its obligations.

Legal assistance in company restructuring

Restructuring should lead to solving the company’s specific problem, not merely postpone it.

That is why we first analyse the debt, the assets, the sources of revenue and the structure of creditors. On this basis, we assess the available solutions and help choose the right course of action.

If there are real grounds for the company to continue operating, we prepare steps towards an agreement with creditors and conducting the appropriate restructuring proceedings.

Our aim is to give the entrepreneur a real chance of putting its debt in order, regaining financial stability and continuing its business.